Joint Press Release

The Stock Exchange of Hong Kong
The Hong Kong Monetary Authority
Hong Kong Securities Clearing Company Limited

SEHK, HKMA and Hongkong Clearing signed agreements
for the listing of EFN on the Stock Exchange

The Stock Exchange of Hong Kong (SEHK) signed a Listing Agreement for Exchange Fund Notes (EFN) today (Monday) with the Hong Kong Monetary Authority (HKMA). HKMA also signed an agreement with Hong Kong Securities Clearing Company Limited (Hongkong Clearing) to admit EFN as eligible securities in CCASS, the Central Clearing And Settlement System.

The Listing Agreement was signed by the SEHK Chief Executive, Alec Tsui and HKMA Deputy Chief Executive Tony Latter, and the Admission Agreement was signed by Mr Latter and Stewart Shing, Hongkong Clearing Chief Executive, at a tripartite signing ceremony.

The SEHK is launching a bond trading market next month. It announced the market infrastructure for the tendering and trading of EFN in June. Issued on behalf of the Hong Kong Special Administrative Region Government for the account of the Exchange Fund by HKMA, EFN will be the inaugural issue to be listed on the market.

Chairman of the SEHK, Lee Hon Chiu, said exchange trading of debt securities would increase the transparency of corporate borrowing. "It will also increase the liquidity of debt securities and provide an additional source of funds for issuers.

"One of the SEHK objectives is to develop into a full services securities market. Trading in EFN and other debt securities will expand the SEHK's product range. It will also help to realise the full potential of the debt securities market," Mr Lee said.

All listed issuers are required to enter into a Listing Agreement before these securities may be listed on the SEHK. The agreements set out the areas of responsibility of listed issuers and the SEHK. The signing of the agreement marks the completion of a further stage in the procedures necessary for the listing of EFN on the SEHK.

At today's ceremony, Joseph Yam, Chief Executive of the HKMA said, "Today's signing ceremony paves the way for the listing of Exchange Fund Notes on the Hong Kong Stock Exchange next month. In addition to offering retail investors an attractive and reliable investment opportunity this listing will mark an important milestone in the development of Hong Kong's debt market."

"I very much hope that this joint effort by the Hong Kong Stock Exchange, the Hong Kong Securities Clearing Company and the HKMA will successfully stimulate retail interest in our Exchange Fund Notes and, more importantly, retail interest in debt instruments generally," he added. The first issue of EFN on the SEHK is expected to be listed on August 16. Trading of EFN will be scripless. Trades executed in the SEHK's trading system will be settled through CCASS operated by Hongkong Clearing.

John Chan, Hongkong Clearing Chairman, said the admission of EFN in CCASS would provide CCASS Participants, including Investor Participants, with a convenient way to tender for, clear and settle EFN.

"HKSCC has developed an electronic tendering mechanism in CCASS for these new scripless debt securities. And, as a recognised dealer and member of the Central Moneymarkets Unit of HKMA, Hongkong Clearing will also facilitate cross-system settlement between institutional investor and retail investor markets," Mr Chan said.

The listing of EFN is a significant step of the development of the Hong Kong bond market, which will make EFN accessible to retail investors. The SEHK, HKMA and Hongkong Clearing believe that the listing will boost the development of the local bond market by paving the way for similar listings by other public and corporate issues.